CONTRACTS OF SALE

A Contract of Sale is a special type of seller-financed sale of real property.  It is analogous to renting to own.  In a typical lender-financed sale, the buyer is deeded the property (i.e. given immediate ownership of the property) and gives the lender a note and mortgage on the real property.  Should the buyer default, the lender must go through foreclosure proceedings to obtain the real property.  In a Contract of Sale, the seller retains ownership of the property until all payments are made by the buyer and then at that time, the seller deeds ownership of the property to the buyer.  Should the buyer default, the seller is entitled to immediate possession of the real property.  The buyer has very few protections in a Contract of Sale.  Recording the Contract of Sale in the real property records of the county where the real property is located, can give the buyer some added protection.  A title search would then reveal the Contract of Sale and the buyer may be given notice of a sale or mortgage of the property by the seller.  However, some Contracts of Sale have provisions that if recorded the contract becomes automatically null and void.  A Contract of Sale is more similar to owning than renting.  The buyer is usually responsible for maintenance and repairs, property taxes, and homeowner's insurance.  Contracts of Sale are typically used for seller financing to buyers who do not have credit to obtain bank financing or when the terms of the contract are much more generous than bank financing.